Sample Calculation: Flash Company Payback Period

Flash Company wants to purchase a new computer that will allow the company to do in-house printing rather than sub-contract the work out to a printer. The machine will cost $45,000. FLash also believes there will be substantial savings on printing costs over the five-year life of the machine.

Savings are anticipated at:

Year 1 $15,000
Year 2 $20,000
Year 3 $40,000

Calculate the payback period?

I need help with entering into excel or using a HPC 12 financial calculator. Not sure where to start.

Solution Preview

cost $45,000
after one year, the payback is $15,000, so we still have 45,000 - ...

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